Orient Turistik Magazacilik San ve Tic Ltd. STI v. Aytek U.S., Inc.

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ORIENT TURISTIK MAGAZACILIK SAN VE TIC LTD. STI, Plaintiff, v. AYTEK USA, INC. d/b/a AYTEK RUGS, et al., Defendants.

Civil Action No. 22-4864 (SDW) (JBC)

United States District Court, D. New Jersey

May 18, 2023

NOT FOR PUBLICATION

OPINION

SUSAN D. WIGENTON, U.S.D.J.

Before this Court is Plaintiff Orient Turistik Magazacilik San ve Tic Ltd. STI's (“Plaintiff” or “Orient”) Motion for a Preliminary Injunction (D.E. 21 (“Motion”)) pursuant to Federal Rule of Civil Procedure (“Rule”) 65 and Local Civil Rule (“Local Rule”) 65.1, against Defendants Mustafa Aslanhan (“Aslanhan”), Umit Kucukkaraca (“Kucukkaraca,” together with Aslanhan “Individual Defendants”), Aytek USA, Inc. (“Aytek”), and Istanbul Rugs, LLC (“Istanbul Rugs,” together with Individual Defendants and Aytek, “Defendants”). Jurisdiction is proper pursuant to 28 U.S.C. §§ 1331 and 1367. Venue is proper pursuant to 28 U.S.C. § 1391(b). This opinion is issued without oral argument pursuant to Rule 78. For the reasons stated herein, Plaintiff's Motion is GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY^[1]

A. Orient and the Customer List

In the 1880s, the Sefer family created a business selling high-quality, handmade carpets. (D.E. 21-2 ¶¶ 4-5.) Over the next century, generations of the Sefer family built up their brand name, reputation, and goodwill as carpet dealers. (Id.) In 1987, the Sefer family business began operating under the trade name “Orient Handmade Carpets,” and since then, Orient has continued to develop the Sefer family's reputation and goodwill under the Orient brand. (Id. ¶¶ 3-5.)

Orient is based in Istanbul, Turkey, where it maintains a showroom of carpets. (Id. ¶ 3; D.E. 21-3 ¶ 3.) Among other means of sale, Orient arranges for tourists to visit its showroom to purchase carpets. (D.E. 21-3 ¶ 3.) Through its sales efforts, Orient has compiled a list of customers living in the United States (“Customer List”). (Id. ¶ 4.) The Customer List purportedly contains contact information-including “customer names, email addresses, phone numbers, and residential addresses”-for over 10,000 of Orient's customers who reside in the United States. (Id. ¶¶ 4-5.) Orient uses the Customer List to maintain contact with its repeat customers and to eventually sell them additional carpets. (Id. ¶ 8.) Orient has taken several steps to protect the Customer List from disclosure, including by:

(i) maintaining the Customer List solely in electronic form on a password-protected computer that is not connected to the Internet or a printer; (ii) protecting the Customer List file with a separate password; (iii) limiting the number of Orient employees with access to the passwords for the computer and the Customer List; and (iv) ordering those employees to hold the information in strict confidence.^[2]

(Id. ¶ 6.)

B. The Scheme

From January 2015 until his termination in January 2022, Kucukkaraca was employed as a sales representative at Orient. (Id. ¶ 9.) Prior to his departure from Orient, Kucukkaraca stole the Customer List. (Id. ¶ 12.) Orient did not learn of Kucukkaraca's theft until on or about April 10, 2022, when a customer called to explain that she had purchased two counterfeit Orient carpets from Kucukkaraca and Aslanhan. (Id. ¶ 13.) Thereafter, several customers contacted Orient with similar stories and testimonials. (Id. ¶¶ 14-15.)

After investigating the customer complaints, Orient determined that the Individual Defendants-assisted by Aytek and Istanbul Rugs-misappropriated the Customer List to further an ongoing bait-and-switch campaign. (Id. ¶¶ 15-16, 22, 24-25.) Specifically, Orient discovered that the Individual Defendants have called, sent text messages to, and made scheduled and unannounced visits at the residences of Orient's customers across several states. (Id. ¶ 16.) During those communications and encounters, the Individual Defendants misrepresented that they were representatives from Orient selling Orient carpets, when in fact the Individual Defendants were attempting to sell carpets from Aytek and Istanbul Rugs.^[3](D.E. 21-3 ¶¶ 15-16, 25-26.) Orient contends that Defendants' scheme has caused several of its United States customers to “purchase[] rugs under the mistaken belief that they were purchasing Orient handmade carpets,” and to exchange “older, authentic Orient carpets (purchased in Turkey or through authorized sales in the United States) believing that they were receiving, in exchange, new Orient carpets when in fact they were receiving Aytek's or Istanbul's lesser quality rugs.” (Id. ¶ 24.) As a result of Defendants' scheme, Orient asserts that its customers have now lost faith in its brand, reputation, and goodwill. (Id. ¶ 26.)

On August 3, 2022, Orient filed its eight-count Complaint alleging primary and contributory violations of the Lanham Act (Counts 1 and 2); violation of the Defend Trade Secrets Act (“DTSA”) (Count 3); violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) (Count 4); violations of statutory and common law unfair competition (Count 5); misappropriation of trade secrets in violation of state laws (Count 6); civil conspiracy (Count 7); and aiding and abetting the commission of civil torts (Count 8).^[4] (D.E. 1.) On October 28, 2022, Orient moved for a preliminary injunction alleging that “Defendants ha[d] ramped up their activities contacting Orient's customers” since the outset of the present litigation. (D.E. 21-1 at 7.)

II. STANDARD OF REVIEW

Rule 65 governs a court's issuance of a preliminary injunction. Fed.R.Civ.P. 65; L. Civ. R. 65.1. “A preliminary injunction is an extraordinary remedy that is never to be awarded as of right.” Winter v. NRDC, Inc., 555 U.S. 7, 24 (2008) (citing Munaf v. Geren, 553 U.S. 674, 68990 (2008)). When considering whether to grant a preliminary injunction, courts must decide whether the party seeking the injunction has shown: “(1) a likelihood of success on the merits; (2) he or she will suffer irreparable harm if the injunction is denied; (3) granting relief will not result in even greater harm to the nonmoving party; and (4) the public interest favors such relief.” Bimbo Bakeries USA, Inc. v. Botticella, 613 F.3d 102, 109 (3d Cir. 2010) (quoting Miller v. Mitchell, 598 F.3d 139, 147 (3d Cir. 2010)). The Third Circuit has placed particular weight on the first two factors, instructing that it “cannot sustain a preliminary injunction ordered by the district court where either or both of these prerequisites are absent.” Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197 (3d Cir. 1990) (quoting In re Arthur Treacher 's Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir. 1982)); see also Juul Labs, Inc. v. 4XPODS., 439 F.Supp.3d 341, 350 (D.N.J. 2020) (“A court will consider all four factors, but the first two are essential . . . A court may not grant injunctive relief, ‘regardless of what the equities seem to require,' unless plaintiffs carry their burden of establishing both a likelihood of success and irreparable harm.” (quoting Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000))). If a court finds that the first two factors weigh in favor of the moving party, the “court then considers the remaining two factors and determines in its sound discretion if all four factors, taken together, balance in favor of granting the requested preliminary relief.” Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017).

III. DISCUSSION

A. Likelihood of Success on the Merits^[5]

A party moving for a preliminary injunction bears the burden to prove its likelihood of success on the merits of its case. Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (citing Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990)). The moving party must “‘demonstrate that it can win on the merits,' which involves a showing that its chances of establishing each of the elements of the claim are ‘significantly better than negligible.'” Mallet & Co. v. Lacayo, 16 F.4th 364, 380 (3d Cir. 2021) (quoting Reilly, 858 F.3d at 179 n.3). Likelihood of success, however, does not require “a more-likely-than-not showing of success.” Reilly, 858 F.3d at 179 n.3. Rather, “a sufficient degree of success for a strong showing exists if there is a ‘reasonable chance, or probability, of winning.'” In re Revel AC, Inc., 802 F.3d 558, 568 (3d Cir. 2015) (quoting Singer Mgmt. Consultants, Inc. v. Milgram, 650 F.3d 223, 229 (3d Cir. 2011) (en banc)).

Here, Orient has shown a likelihood of success on at least two of its claims.^[6]

1. Violations of the Lanham Act

Section 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a), states, in relevant part:

(a) Civil action

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a). Section 1125(a) thus “creates two distinct bases of liability: false association, § 1125(a)(1)(A), and false advertising, § 1125(a)(1)(B).” Lexmark Int'l, Inc. v....